London: World stocks posted a new 2009 high on Friday, hitting levels last seen six months ago, and the dollar sank to a five-month low against major currencies on hopes the global economy has seen the worst of its downturn.
Wall Street looked set to join the rally. Commodity prices also gained, with oil at a six-month high, crossing $66 (Rs3,121) a barrel.
“We’re back to the pro-risk theme, as markets continue to anticipate growth to return in the second half of the year,” said Lee Hardman, currency economist at Bank of Tokyo- Mitsubishi UFJ.
On recovery path: A man checks the figures on stock board of a securities firm in Tokyo on Friday. Japan’s Nikkei average closed up 0.75%. Koji Sasahara / AP
MSCI’s all-country world stock index was up 1%, having hit 245.40, its highest level since late October. The index has gained nearly 43% since a global stock market rally began in March.
Emerging markets stocks were also at year highs.
The pan-European FTSEurofirst 300 was up 1.1% and Japan’s Nikkei average closed up 0.75% at a more than seven month high.
Stock markets have been rising since March, although there had been some signs recently of an easing off in gains.
Hopes for a second-half recovery in the global economy, however, have been fanning demand for riskier assets and those tied to growth.
The Reuters-Jefferies CRB index, a global commodities benchmark, is up 12.3% for the month, on its way to the biggest monthly gain since July 1974.
“Gains in commodities reflect continued recovery of demand outlook from its collapse after Lehman’s bankruptcy triggered concerns of a depression,” said Dariusz Kowalczyk, chief investment strategist with SJS Markets in Hong Kong.
“Medium-term outlook remains positive for commodities and other risky asset classes as we continue to expect that US GDP (gross domestic product) will start to expand in Q3 and several major Asian economies already in Q2,” he said in a note.
Spot gold was up 1.4% at $972 an ounce for a near 10% gain on the month.
Some of the rise in commodity prices, however, is linked to the fall in the dollar, which hit a five-month low against a basket of currencies.
Signs the global recession may have passed its worst has reignited concern about ballooning US government debt and prompted investors to sell the safe-haven currency.
The euro rose 1% to above $1.40 and the dollar sank 1% to less than 96 Japanese yen.
Higher-yielding currencies were big gainers as befits a mood of risk appetite. The New Zealand dollar gained nearly 1.7% against its US counterpart.
Yields on euro zone government bonds fell despite the stock gains.
“Euro zone supply is out of the way...maybe there’s a bit of a chance of an end of week recovery,” said a trader in London. “There’s a fair bit of data so there’s a danger that US data comes out on the strong side again and knocks things down.”
Tamawa Desai contributed to this story.